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Article Courtesy of the Sun Sentinel
By Joe Kollin
Posted Saturday, July 24, 2004
Some
1,176 owners of condos and homes in South Florida will be eligible to join a
lawsuit seeking damages from a law firm that threatened them with foreclosure
for not paying assessments to their associations.
The lawsuit's impact, however, could be felt by more than 2 million owners in
association-ruled communities. If the plaintiffs win, owners could no longer
lose their homes for failing to pay late fees or attorney fees.
U.S. District Judge William P. Dimitrouleas in Fort Lauderdale this week
granted class-action status in the lawsuit against Katzman & Korr, of
Lauderhill, because he said so many people are involved in a similar
situation.
Katzman & Korr represents more than 400 associations in South Florida,
according to its Web site, and had issued collection letters to 1,176 owners
for failure to pay association-related charges.
The firm's attorney, Brian McCarthy of Miami, said Friday that he just
received the ruling and couldn't comment except to say, "At first glance,
we disagree with certain aspects of it and are looking into the possibility of
an appeal."
The suit against the firm was first filed in December by Ramsey Agan, a
retired mortgage banker, and his wife, Grace, who own an apartment in the
Plaza East Condominium at 4300 N. Ocean Blvd., in Fort Lauderdale.
Their association in 1999 assessed all owners thousands of dollars to replace
concrete balconies. Although the Agans claim that they paid and that the
association president admitted they owed nothing, Katzman & Korr in 2000
filed a lien for $1,001.01 on their apartment.
The Agans sued, saying the $1,001.01 was to pay the attorneys for trying to
collect a debt they didn't owe.
They asked Dimitrouleas to rule the lien violates the federal Fair Debt
Collection Practices Act and the Florida Consumer Collection Practices Act.
The suit accuses the firm of making false representations of the
"character, amount or legal status of the debt," threatening to take
action that cannot legally be taken, using "deceptive means in an attempt
to collect a debt," failing to state the correct amount of the alleged
debt and claiming or threatening to enforce a debt known to be "not
legitimate."
In addition, the Agans asked for an order requiring an end to such practices
and an unspecified amount of damages from the firm.
In March, they won their first victory when Dimitrouleas ruled Katzman &
Korr can be considered a debt collector. The firm's attorney had argued condo
assessments aren't debts so the firm isn't a debt collector and therefore
isn't required to comply with debt collection laws.
The Agans' attorney, O. Randolph Bragg of Chicago, said every owner who
received a similar collection letter from Katzman & Korr, between
approximately December 2001 and December 2003, would be invited to join the
suit.
He said they'd be notified in the next few months. It won't cost them anything
to be part of the suit and each will have the chance to opt out.
Dimitrouleas was the second federal judge in Florida within the past year to
rule against attorneys who say they aren't subject to the debt collection
laws. A federal judge in Tampa last year ruled against Becker & Poliakoff,
the Fort Lauderdale-based law firm that represents more associations than any
other.
Gary Poliakoff, who heads the firm, has said rulings against lawyers could
seriously hurt the ability of associations to maintain property values and
force honest owners to make up for debts that scofflaws owe.
Attorneys earn their fees only if they win, he said. Not letting them
foreclose, he said, would discourage them from aggressively seeking debts. If
associations can't get their assessments paid, they won't have the money for
pool and lawn maintenance, painting and insurance.
Helio De La Torre, an attorney whose Miami firm collects debts for
associations, said foreclosure must remain a tool to be used to threaten
owners.
"Even though it seems harsh, foreclosure is the only vehicle we have for
recovering debts," he said.
As a general rule, however, his firm won't seek foreclosure for late fees
only. Foreclosure would be considered only for the complete package of late
fees, attorneys, fees and the assessments.
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